Social Security 10 Years From Now: A Choice of Two Futures

For The Huffington Post’s 10th anniversary I was asked to predict what Social Security might look like 10 years from now. That future is filled with both possibility and shadowed by danger.

To understand exactly how rich those possibilities are, let’s begin by looking back 10 years.

Dark Days

In 2005 President George W. Bush and his fellow Republicans were hard at work trying to privatize Social Security. Their proposal would have replaced much of this guaranteed-benefit program with a plan that would have invested its funds in privately managed accounts instead. That would have been a massive payday for Wall Street, but would have been catastrophic for the American people.

The Democrats successfully defeated the plan, and voters rewarded them with their trust. Polls showed that voters trusted Democrats with this popular program by a margin of more than 20 points in 2005. Older voters turn out in large numbers in off-year elections, and 2006 was no exception. The Democratic advantage on Social Security helped them recapture the House of Representatives that year.

By 2010 that margin was gone. President Obama, who had campaigned on a platform of protecting Social Security, had reversed course, appointing two anti-Social Security activists to co-chair a “deficit commission” which was also charged with addressing Social Security’s finances. Predictably enough, the co-chairs proposed benefit cuts (which the President was later to include in an annual budget).

Polls in 2010 showed that the Democrats’ massive advantage on Social Security had now evaporated, and the Republicans held a slight edge. The GOP ran on a phony and vague platform – a “seniors’ bill of rights.” They recaptured the House that year.

Those were dark days for the hundreds of millions of Americans who either depend on Social Security today or expect to do so in the future. President Obama seemed determined to strike a “grand bargain” that included Social Security cuts. Even many of the Democrats’ most liberal leaders verbally embraced the faulty economics and kamikaze politics of Social Security cuts. Decades of paid proselytizing by paid “entitlement” opponents had hardened into conventional wisdom in Washington, and no amount of common sense or polling data seemed capable of changing it.

A New Debate

What a difference a few short years have made. Today, many people in Washington understand that Americans’ retirement security has been devastated by a radical wealth grab on behalf of the richest among us. For decades, gains in national wealth have gone primarily (or exclusively) to the wealthy.

For the rest of us, wages have stagnated and personal wealth has fallen. At the same time, employers have largely dismantled guaranteed-benefit pension plans, replacing them with savings programs that are incapable of meeting the retirement needs of the middle class.

Those facts are more widely understood now. And more of our nation’s leaders realize that Social Security’s benefits are, in fact, lean by the standards of comparable nations. Five years ago, simply protecting those benefits seemed like an uphill battle. Today there is a national movement to increase those benefits – a move that is urgently needed – and a number of leaders on Capitol Hill have proposed benefit increases.

That doesn’t mean the battle is over. No Republican has endorsed benefit expansion. In fact, the GOP leadership on the Hill spent the first day of this year’s session ginning up an artificial crisis over SSI, Social Security’s disability program, in order to set the stage for plan-wide benefit cuts.

The leading Democratic presidential candidate, Hillary Clinton, said in her last campaign that she was opposed to taxing millionaires and billionaires (by lifting the “payroll tax cap”) to strengthen Social Security’s finances, an idea that is popular with voters and is gaining broader support on the Hill. Clinton in 2008 said instead that we needed to “rein in (Social Security’s) budget” and “pay as we go.” She also endorsed the idea of a commission like the one Obama eventually created. This time around she has yet to sign on to the idea of expanding benefits.

In short: Republicans are determined to gut Social Security, while Democrats have yet to flatly reject budget cuts or endorse its expansion as part of the party platform. This means that there are two possible futures for Social Security.

A Positive Scenario

If pro-Social Security forces prevail, we may well have a program that has expanded its benefits and is in sounder fiscal shape than ever. How would that be done? Benefit expansion can be funded with a tax on millionaire and billionaire earnings, along with other potential funding sources that include a financial transaction tax. (That would also discourage risky computerized trading.) Polling by the National Academy of Social Insurance has also shown that the public is willing to accept increases in their current payroll tax rates in order to fund benefit increases. (Those increases would amount to no more than a few dollars per paycheck for most Americans.)

Under this positive scenario, pro-Social Security forces are also likely to have beaten back the ongoing cuts to Social Security’s administrative budget. Social Security is run far more efficiently and cost-effectively than any private-sector retirement program. But its administrative funds (no more than a penny or two on the dollar) have been repeatedly cut, which is leading to office closings, phone delays, and unrealistic plans for an automated administrative process.

With the Baby Boom poised to add millions of customers to Social Security’s rolls, this is the time to expand Social Security’s administrative budget, not keep cutting it. In our bright scenario, that will have been done. Neighborhood offices will be readily available, and trained employees will be available to help Americans navigate the system.

We could even see the expansion of Social Security’s services in some creative ways. For example, why not use this highly cost-effective program to manage people’s voluntary retirement contributions as well? Our ability to use this efficient and nearly universal system is limited only by our imagination.

The Dark Road

Unfortunately, that’s not the only possible future for Social Security. This president appears to have no more appetite for “grand bargains” or Social Security cuts, and that’s good news. His party seems to have realigned itself in favor of Social Security – which seems appropriate, since Social Security is one of its signature accomplishments.

But Republican leaders, with the apparent exception of Mike Huckabee, appear to have become more intransigent on the issue than ever. There will be no Social Security expansion as long as they control Congress – and the best route to taking Congress from their grasp appears to lie with a firm Democratic commitment to Social Security expansion. There is no guarantee that this commitment will be forthcoming.

What’s more, there is nothing to say that Republicans may not soon control all three branches of government. That could make Social Security cuts inevitable. Or a Democratic president who’s less committed to the program may revive Obama’s strategy, more successfully this time, and strike a future “grand bargain” that decimates the program.

That would be tragic. The middle class has already suffered from stagnating wages and the loss of its personal wealth. Cuts to Social Security could doom millions to retirements filled with penury and fear.

Which Future?

The past 10 years have shown us that, when it comes to the politics of Social Security, we can make major progress as a nation. But they also teach us that Social Security is not safe from the predations of career politicians in either party looking to make a short-term deal, please wealthy backers, or follow the misguided consensus of well-funded policy insiders.

The future of this vital and popular program is in our hands. It can be strengthened if we fight for it. It can also be taken from us, piece by piece, if we don’t. The responsibility for Social Security’s future, as always, lies with us.